New Delhi, Feb 28: Smoking and consumption of other tobacco items is set to become more expensive, while increase in service tax rate would make costlier a whole lot of other things including air travel, eating out and paying bills. Those which will turn cheaper include leather footwear, locally made mobiles, computer tablets, microwave ovens, peanut butter, packaged fruits, ambulance service and agarbattis. Continuing the trend set by his many predecessors, Finance Minister Arun Jaitley today came down heavily on smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2015-16. (Read: LIVE Union Budget 2015-16 by Finance Minister Arun Jaitley News Updates: FM ends the speech with a Sanskrit shloka)

Citing need for promotion of public health, Jaitley said: “Excise duty on cigarettes is being increased by 25 per cent for cigarettes of length not exceeding 65 mm and by 15 per cent for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos.”  He made changes to the compounded levy scheme applicable to pan masala, gutkha and certain other tobacco products. As per the Budget proposals, excise duty on cut tobacco is being increased to Rs 70 per kg from Rs 60 per kg earlier.

On the increase of Service Tax, Jaitley said: “To facilitate a smooth transition to levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36 per cent to a consolidated rate of 14 per cent.” Subsequently, eating out at restaurants, stay in hotels, air travel, cable and DTH services, visiting beauty parlours, courier service, credit and debit card related services, dry cleaning of clothes, stock broking, asset management and insurance and a host of other activities that require availing of service from another party will become expensive.